Retail entrepreneur Kevin Stanford has launched an eleventh hour management buyout for his struggling fashion chain AllSaints, which is understood to be facing an imminent deadline to find a buyer or face the possibility of administration.

Backed by US investor Goode Capital and another private equity group, believed to be Lion Capital, Stanford's consortium is offering to buy £25m of debt from two Icelandic banks that are AllSaint's leading shareholders.

Kaupthing and Giltnir, which collapsed during the Icelandic banking crisis, have appointed Ernst & Young to sell their interests in AllSaints, which has nearly 60 stores in the UK.

Goode isn't offering anything for the ordinary share capital of AllSaints, which analysts say is worthless. The main creditor of Kaupthing and Giltnir is the Reykavik government.

Private equity chief Jon Moulton has also been in talks with AllSaints. He was propelled into the national spotlight in 2000 when he made an unsuccessful bid for MG Rover when he ran Alchemy Partners.

Moulton, who today runs Better Capital, told the Guardian: "We've been engaged with AllSaints late in the day. It's a strong and attractive brand." But senior retail executives said Stanford was in the leading position to clinch a deal, although things could still go wrong and administration remains a possibility.

Stanford has been working with Goode Capital for months, but earlier plans for a bid were derailed when several co-investors in the consortium pulled out at the last minute. But the entrepreneur's efforts have been boosted by the arrival of a "mystery'' investor that has promised to back Goode, according to well-placed City sources.

The cash crunch at AllSaints, which owes Lloyds Banking Group about £40m, has been prompted by the failure of Kaupthing and Giltnir, which the company used to rely on for working capital.

AllSaints chief executive Stephen Craig said on Tuesday: "I am confident a deal can be completed by the end of the week." He denied that accountancy firm KPMG were standing by as a possible administrator.

Stanford's consortium are thought to have tabled a bid worth £102m that includes an immediate cash injection as well as paying down the debt owed to the Icelandic banks. Lloyds is understood to be willing to increase a revolving credit facility from £28m to £40m.

AllSaints, which has expanded into the US and Europe, is known for its distinctive shopfronts full of vintage sewing machines. Lloyds declined to comment.